The United States Navy has protected America for more than 242 years by patrolling the earth’s oceans. This is no small task as 70% of the world is covered in water.

At the center of this global force for good is the aircraft carrier. It’s a powerful asset supported by a carrier strike group. A group consists of an aircraft carrier, two guided-missile cruisers, two destroyers, one frigate, two submarines, a supply ship, and 65 to 70 aircraft. It also includes about 7,500 personnel.[1]

The U.S.S. Ronald Reagan is one of the Navy’s largest and most sophisticated ships. The ship’s motto is, “Peace Through Strength” and its guiding principles include professionalism, integrity, and operate as a crew. It consists of several thousand professionals doing their job but acting as one crew to deliver excellence.[2]

The group is 100% on watch and it’s constantly looking for threats above, below and an on the water. This efficient team works in concert to insure we can sleep peacefully.

Investors should create their own financial version of a carrier strike group.

At the center of your group should be your financial plan because it will help you formalize your financial goals and it will drive your asset allocation and investment selection. It will also include a time-line for achieving your goals and it will assist you in charting a course for success. When a carrier strike group leaves a port like San Diego they do so with a destination in mind, so, too, should your plan.

A team of advisors can help you achieve your goals to make sure your financial foundation is well fortified. Your supporting cast can include a financial planner, investment advisor, attorney, accountant and insurance agent. Part of the vision statement from the U.S.S. Ronald Reagan is “to do what is right and what is necessary, even when it is difficult.”[3] Your advisors should apply this same metric when offering you advice and guidance.

The investment portfolio you construct should consist of high quality, low cost funds diversified across large, small and international companies with bonds and cash added to reduce risk and volatility. Your portfolio will consist of thousands of individual securities. A portfolio of four funds managed by Dimensional Fund Advisors (Core Equity I – DFEOX, International – DFIEX, Small Cap – DFSTX and Fixed Income – DFAPX) will own over 10,000 securities. On any given day these individual investments may be up, down or sideways. The daily movement of these securities are trading independently but act as one portfolio to help you achieve your goals. An equal weighting to these four funds generated a one-year return of 17.18%.[4]

Tactical trading strategies may enhance your returns or protect your portfolio. Adding individual stocks or stock options to your account will allow you to be nimble in the short-term. The stock market may behave irrationally in the short term giving you an opportunity to buy or sell investments at more favorable prices. The U.S.S. Hewitt is a destroyer and a supporting cast member to a carrier strike group. A destroyer is used to protect the aircraft carrier because it’s fast, nimble and maneuverable. It can be more tactical with short terms moves when compared to the massive aircraft carrier.

The supply ship is probably the unsung hero of a carrier strike group. These ships are needed to refuel and restock the ships in the group. Without the supply ship the group probably wouldn’t get very far. To replenish a ship, the group must stop or slow down to receive her new supplies. The USS Arctic is a supply ship and it can carry 177,000 barrels of oil, 2,150 tons of ammunition and 500 tons of dry goods.[5] Each year you should stop or slow down to review your investment accounts and financial goals to make sure you’re still on the right course to realizing your dreams. A short-term pause will be beneficial to your long-term goals.

As we approach the new year I recommend spending time to create your financial strike group, so you can improve your odds of achieving financial success. The end of the year is a great time to review your financial situation to make sure you have the right team and investments in place for your long-term goals.

Last, I want to thank my cousin, Peter Snyder – USNA ’90, for his service to our country and his help with my blog.

Anchors Aweigh!

Bill Parrott is the President and CEO of Parrott Wealth Management an independent, fee-only, fiduciary financial planning and investment management firm in Austin, TX. For more information please visit www.parrottwealth.com.

December 7, 2017

Note: Past performance is not a guarantee of future returns. Your returns may differ than those posted in this blog. Investments are not guaranteed. Options involve risk and are not suitable for all investors.